States wrestle with stimulus funding

States don’t have the money to manage the money they’re supposed to be managing.

And that is worrying state officials around the country. They know the Obama administration will provide intense oversight of their use of stimulus dollars, and call them on the carpet if they can’t account for how they spend the money. At the same time, the administration is pushing the stimulus money out the door as quickly as possible, adding extra pressure to the states.

President Barack Obama’s vision of unprecedented transparency in tracking the American Recovery and Reinvestment Act's $787 billion has wide appeal. But state officials aren't sure how much reporting is realistic.

“There is no question that it’s a daunting task for states, and there are a lot of questions still to be answered,” said Scott Pattison, executive director of the National Association of State Budget Officers.

State officials also are trying to identify funding in the recovery act that will help them meet their reporting responsibilities, especially for gathering and transmitting information on details such as subcontracts and job creation.

“There would certainly be additional costs to states,” said Vern Jones, Alaska's chief procurement officer and president of the National Association of State Procurement Officers. “How states might pay for any additional costs is still unknown.”

To fully achieve the president’s vision, states likely need to reconfigure their reporting systems that are expected to handle nearly $300 billion of the stimulus funds. The hodgepodge of state systems will need to conform to common requirements to report contracts, subcontracts, subgrants, job creation and other data, according to state and federal officials and other experts.

Those are especially intimidating tasks for at least two reasons. The White House has a goal of spending the stimulus money quickly to create the most jobs, and the recovery act doesn’t offer explicit funding to states to reach an unprecedented level of transparency.

“Do the states need help? Definitely they do,” said Craig Jennings, federal fiscal policy director at OMB Watch, a nonprofit watchdog group. “If Obama really wants to move this forward, he will have to provide resources and advice. It will take a lot of work.”

Meanwhile, state officials are moving to centralize their communications on economic stimulus spending to improve reporting and accountability. As of March 30, all but three of the 50 states have created Web sites highlighting their economic stimulus funding. Those 47 states are now linked from a map on Recovery.gov. But appearances can be misleading.

The patchwork of state Web sites shows some of the primary difficulties in tracking stimulus funding.

A quick tour of the state Web sites reveals a jumble of information rather than a cohesive approach. Some overachieving states offer numerous links and charts and others present detailed spending data. However, many give just a brief overview.

“For states to put up a Web site is not a big deal," Jennings said. "But putting up a reporting infrastructure is a big deal. It is not just computer systems but also changing how the states do business.”

Some governors are already realizing they might need assistance. “Some of the implemented work will exceed our bandwidth, so we are looking at the possibility of contracting out for accounting, compliance and legal advice,” said Evan Dreyer, a spokesman for Gov. Bill Ritter of Colorado.

States are taking different approaches in the degree to which they are centralizing their data reporting and collection, Pattison said.

Centralization might be helpful to states, said Ray Scheppach, executive director of the National Governors Association, in an online seminar March 26. It is best to have a central liaison in each state, he said.

“Agencies are talking to agencies. We’re saying: talk to the governors,” Scheppach said.

“The administration is trying to walk a line," Jennings said. "They want strong reporting, but they are concerned about burdens to businesses or states."

Data experts are offering their help with the data challenges.

Fixing the situation will take a coordinated approach. The Coalition for an Accountable Recovery, a group that includes OMB Watch and others, recommends a common data template, data-reporting infrastructure, Extensible Markup Language data standards, and guidance on new forms of data for subcontracts and job creation.

Onvia, a private consulting firm based in Seattle that tracks government spending, said it took a decade to develop a data architecture and integrate spending data from 89,000 state and local agencies. They pull the data from public sources such as Web sites, newspapers and the minutes from meetings held by state and local government officials. Onvia recently set up its Recovery.org Web site to report on stimulus spending as a marketing tool.

“It takes a lot of time,” said Eric Gillespie, the firm’s chief information officer. “We had to build an entire taxonomy for the reporting.”

Another project, StimulusWatch.org, posts raw data about the stimulus spending online for thousands of journalists and activists to comb through.

Jerry Brito, senior research fellow at the Mercatus Center at George Mason University who initiated StimulusWatch.org, said a similar format could be applied to actual stimulus projects to empower better citizen auditing. StimulusWatch.org was launched as a wiki in February with a list of possible stimulus projects put together by the U.S. Conference of Mayors. About 2 million people have visited, and 600,000 visitors have voted on the projects.

“We don’t need hundreds of auditors if we have crowd-sourcing,” Brito said.

The White House expects to turn over Recovery.gov Web site to the Recovery Accountability and Transparency Board by late April or early May.

The board is just getting started in its work and has not yet considered data requirements, according to Chairman Earl Devaney. The board is preparing to take over operation of the Recovery.gov’s reporting of how the stimulus money is being spent, and the Office of Management and Budget’s second round of reporting guidance is expected to be distributed shortly to federal, state and local officials.

Lawmakers and advocates are urgently echoing Obama’s call to deliver comprehensive spending and contracting data at high levels. “I have major concerns about the administration’s primary transparency tool, Recovery.gov,” Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, wrote to Vice President Joe Biden March 19. “Recovery.gov is currently not a usable database.”

Obama might be taking on political risks if he fails to implement major changes in transparency while also distributing the stimulus dollars at record speed. But open-government supporters say the demand for openness is strong and growing.

“Unprecedented levels of spending call for unprecedented transparency,” Jennings said.

As state officials scramble to launch a competent reporting system, Rep. Darrell Issa (R-Calif.), ranking member on the House oversight committee, has started to question Obama’s commitment to openness in Recovery.gov.

“To spend the money first, and figure out transparency later, is disingenuous,” said Kurt Bardella, Issa’s spokesman.